Our Business Value Builder Programme helps show companies how they can become a more valuable business. A valuable business is one that can be sold for a good price, passed on successfully to next generation or retained for long-term predicable income. Whichever of those is your objective the same principles apply.
In a previous article we outlined the eight key drivers to building lasting value in your business. These represent the ‘what’ in your business – they are outcomes to be achieved over time.
Successful businesses have three fundamental attributes that enable them to scale effectively and achieve long-term lasting business value.
1. Intellectual Property. Successful companies are more than just operationally focused; they are also distinctive. Intellectual property gives you a substantial competitive edge in the marketplace. But it is not just patents. It can also be your brand values, control of your market place or other attributes which create barriers to entry for a competitor. Well-known companies like Amazon, Google, and Microsoft recognised the importance of leveraging IP to fuel their growth. Indeed, their growth in turn created a barrier to entry that further sustained their market-leading positions. Eddie Rockets in Ireland continues to fuel its growth through a mixture of brand loyalty and a clear franchise model.
2. Skills leverage. To grow without damaging your brand you must ensure a consistent experience for your customers regardless of where or when they interact with you. This is as true for your local barber as for your favourite global fast food brands. One to watch here is Camille, the Thai takeaway food franchise. Growing consistently and successfully means they need to offer a predicable customer experience regardless of where the customer orders their food. They needed to develop a set of repeatable and teachable processes to ensure its staff delivers a consistent customer experiences.
3. Financial Leverage. Some businesses simply devour cash as they grow. They need expensive equipment or additional locations in order to deliver each new customer sale. They also may have to finance working capital in stock and debtors. Banks or other finance providers look at how much free cashflow is generated from growing the business and if this equation is not sufficiently cashflow positive over time then they will be reluctant to finance your growth ambitions. Many businesses now deliver their service online with cash up front and thus avoid all of those headaches. Which would you rather be?
Many traditional business models have had to evolve over time to respond to the changing demands from consumers. The traditional car dealer is a good example. Not so long ago these businesses primary focus was car sales. However, over last 20 years these businesses have evolved from a singular purchase every five years to an ongoing engagement with the customer through after sales support services such as maintenance, finance, and other brand experiences. Through this continual engagement they maintain a customer loyalty and more predictable revenue streams.
When we work with business owners we look at how we can help them leverage these three fundamentals of sustainable business growth to create lasting value. Contact a member of our Business Value Builder team to find out how we can help you.